strategies in tackling shadow economy · e-lejar payment of income tax through appointed banks...

STRATEGIES IN TACKLING SHADOW ECONOMYMr Jafni HashimTax Compliance Department

Inland Revenue Board of Malaysia

1Date of Presentation: 11 November 2019

AREAS OF SHADOW ECONOMY

MAIN CHALLENGES & FUTURE STRATEGIES

DEPARTMENT IN CHARGE

STRATEGIES

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MAKING COMPLIANCE EASIER

PRESENTATION CONTENT

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The shadow economy refers to all work activity and business transaction that occur ‘below the

radar’ – economic activity that is undeclared and for which taxes that should be paid are not.

Also known as underground, informal sector or black market economy includes illegal activities

such as drug dealing and smuggling, prostitution, gambling, as well as bribe-taking.

When economists are calculating the GDP of a country, they do not include what goes on in the

shadow economy.

BACKGROUND OF SHADOW ECONOMY

STRATEGIES

Taxpayers’ data gathering

Targeting on the high net worth

individuals

Focus on the non-compliance taxpayers

(including shadow economy)

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1. STRATEGIES – ENFORCEMENT

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THREE COULMNSAPPROACHES USED FOR TAX AWARENESS AND EDUCATION PROGRAMMES

1. STRATEGIES – TAX AWARENESS & EDUCATION PROGRAMS

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EDUCATION

ACTIVITIES

ADVISORY /

COACHING CLASSES

SMART

COLLABORATION

TAX EDUCATION

MATERIALS

PARTNERING

PROGRAM

TAX AWARENESS

PROGRAM

Education program exclusively organized

by IRBM

For entrepreneurs, employers and public

With Government agencies /NGOs/

Associations/Institutes of Higher Education

Diversifying tax education materials

With Kidzania Kuala Lumpur

With professional bodies – Hasil Taxplorace,

Kem Cerdik Cukai, EY Young Tax Professional

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1. STRATEGIES – ARTICLE

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SPECIAL OPERATION DEPARTMENT

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Illegal activities with a focus on high risk businesses

Planned financial crime and syndicated crime

Money laundering activities especially involving high cash transactions

2. DEPARTMENT IN CHARGE

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BIL INDUSTRY TYPES OF BUSINESS ILLEGAL ACTIVITIES POTENTIAL TAX ISSUES

1. Property Property Developer

Contractor

Property Investment

Syndicated money laundering

Corruption and Fraud

Commission recipient

Cost of acquisition of property upon

disposal / buyer information

2. Entertainment Night club / Karaoke

Gambling

Reflexology Center

Family Entertainment Center

Prostitution

Illegal gambling

Sales of Smuggling Liquor

Drug dealer


Smuggling agent / runner

Gambling Agent

Related Proxy

3. Commodity Logging

Industrial Diesel Supplier

Cigarette Manufacturers

Sand Mining

Palm Oil / Coconut

Gold shop


Smuggling of Subsidized Diesel

Smuggling of Cigarette

Steal of Sand

Money Laundering

Sales of Stolen Gold


Smuggling Agent / Runner

Related retailers

Proxy

Emergency Agent

Supplier / Customer Information

4. Investment Stock Investments

Currency Investment

Crypto Currency Investment

Collection of Illegal Deposits

Money fraud

Money Laundering Remittance

Money Laundering Agent

Investors

Money Remittance Agent

Proxy / Runner

5. Money Lending Money Lending Illegal Money Lending Money Lending Agent

Proxy / Runner

3. AREA OF SHADOW ECONOMY

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BIL INDUSTRY TYPES OF BUSINESS ILLEGAL ACTIVITIES POTENTIAL TAX ISSUES

6. Education Private College

International School

Trafficking

Money laundering

Agent / Runner

Remittance Agent


7. Manufacturing Gloves

Health product

Cigarettes

Iron Goods

Heavy machinery

Money Laundering


Smuggling


Smuggling agent / runner

Remittance Agent

Supplier / Customer Information

8. Cash Trading The restaurant

Light Food Kiosk

Telecommunications Products Sales

Building Materials Store

Mini Market

Money Laundering


Money Laundering Remittance

Money Remittance Agent

Supplier / customer information

9. Services Information Technology

Telecommunications substation

Logistics

Management Company

Foreign Trade Agent


Trafficking



Agent / Runner

10. Textiles Wholesale of clothing and textiles

Uniform Supplier

Corruption

Money Laundering based on Trade


Agent / Runner (Missing Trader)


3. AREA OF SHADOW ECONOMY

Income not previously declared / expenses over claimed / expenses not

allowed and reliefs / deductions / rebates over

claimed

Stamping of unstamped instruments 03 01

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Reporting of gains on disposal of assets (real property and shares

in a real property company

SVDP

4. SPECIAL VOLUNTARY DISCLOSURE PROGRAM (SVDP)

SPECIAL VOLUNTARY DISCLOSURE PROGRAM (SVDP)

4. MAKING COMPLIANCE EASIER

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REGISTRATION

Register as individual taxpayer, company and employer

e-DAFTAR

Facilitates taxpayer to update Personal Profile, Relief Information and Company Profile

e-KEMASKINI

TAX FILING

Fill and submit Income Tax Return Form (e-BE) via mobile devices

m-FILING

Fill and submit Income Tax Return Form

e-FILINGFill and submit Income Tax Return Form

BNT e-FILING

Tax agents to submit Income Tax Return Form on behalf of their client online

TAeF

Assessment and Stamp Duty Payment system via online

STAMPS

Assessment and Stamp Duty Payment system via online

DIGITAL FRANKING SYSTEM

OTHER eSERVICES

Applying tax clearance letter by employer via online

e-SPC

Employer to check and verify the submitted prefill data

e-DATA PRAISI

Certificate of Residence (COR) is issued to confirm

the resident status in Malaysia

e-RESIDENCE


ezHASIL (ELECTRONIC SERVICES)

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TAX

PAYMENT

Latest tax information activities, acknowledgement receipt of Form e-BE/ e-B/ e-M/ e-MT/ e-Lodgement and refund notification

MyTax

Check Personal Information, Ledger Transaction and Latest Tax Balance Information

e-LEJAR

Payment of income tax through appointed banks

ByrHasil

Employer to check CP39 file format and upload the txt file to be submitted to IRBM via online

e-DATA PCB

For employer without computerized payroll system to calculate and check MTD

e-PCB & PCB CALCULATOR

For employer to submit their employees MTD data and make online payment

e-CP39


ezHASIL (ELECTRONIC SERVICES)

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01 Web-based sharing economy

02Identification of money change in hand

03Business by nature not subject to governmental oversight

5. MAIN CHALLENGES

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01Tax laws and policies continuously monitored, updated, and reformed

02Develop blueprint to detect, address and respond in order to curb shadow economy in Malaysia

5. FUTURE STRATEGIES

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